Ontario’s new budget may have squared enough political circles to keep Premier Kathleen Wynne’s government alive. But is it a credible economic blueprint for the province?

The government has seemingly bent over backwards to adhere to NDP demands that it reduce premium rates by 15 per cent. But read the fine print. This 15 per cent cut is an average to be achieved over an unspecified period of time, writes Thomas Walkom.

Ontario’s new budget may have squared enough political circles to keep Premier Kathleen Wynne’s government alive. But is it a credible economic blueprint for the province? That’s a different question.

The political question will eventually be solved by Andrea Horwath’s New Democrats. On Thursday, the NDP leader carefully hedged on whether her party would support Finance Minister Charles Sousa’s budget, saying she wanted to have “discussions” with Ontarians first.

But suppose for a moment that the NDP ultimately refuses to join Tim Hudak’s Conservatives in bringing down the Liberal minority government.

Suppose for a moment that Thursday’s budget is meant to be a serious document and not just something designed to let the Liberals live another day. What then?

First, note that this is ultimately a restraint budget. Wynne, like her predecessor Dalton McGuinty, has drunk the metaphorical Kool-Aid of the right, insisting that the only way out of the economic slump is to balance Ontario’s budget by 2018.

The Liberals have agreed to new spending demanded by the NDP. But they have also pledged to let overall spending grow on average by less than 1 per cent a year.

Translation: the new NDP spending increases are to be offset by unspecified cuts somewhere else.

“Eliminating the deficit is the single most important step we can take to grow the economy and create jobs,” Sousa told the legislature Thursday. His words echoed those of his predecessor Dwight Duncan. And both are dead wrong.

The single most important step the province can take to boost job growth is to create more jobs. Cutting government spending doesn’t do that. It does the opposite.

Second, note that the exact form this restraint will take is still unclear. The government has already taken on the province’s teachers and won. The elimination of teacher sick days provided a one-time spending cut of about $1.5 billion last year.

The Liberals also successfully squeezed about $500 million from the province’s doctors.

But it is still unclear what kind of cuts will be made in the future to ensure a balanced budget by Sousa’s target date of 2018.

The budget says the Liberals intend to keep a public sector wage-freeze in place until the books are balanced. Perhaps public sector workers will accept that gracefully. But, faced with indefinite declines in their inflation-adjust earnings, maybe Ontario’s nurses, health-care workers, teachers and other public sector employees will balk.

Third, the job creation measures in this budget are either unclear or minimal. A new wage subsidy scheme aimed at employers who hire young people is expected to create 25,000 jobs of indeterminate length over two years.

About 569,000 Ontarians are currently estimated to be out of work — including 178,000 young people.

The government is promising new infrastructure spending, which could give a boost to job growth. But it won’t say how much new money it will put into projects like roads and bridges.

Fourth, auto insurance. The government has seemingly bent over backwards to adhere to NDP demands that it reduce premium rates by 15 per cent.

But read the fine print. This 15 per cent cut is an average to be achieved over an unspecified period of time.

More to the point, the NDP rate reduction scheme is itself fatally flawed. If Ontario private insurers don’t like having their profits cut they will simply go on strike by refusing to issue policies.

The insurers have done that before. When the private insurers go on strike, more Ontario drivers are forced into the province’s last-ditch insurance scheme, one in which rates are even higher.

The alternative (which private insurers do like) is to again reduce payouts for those hurt in auto accidents. Is that what the Liberals and NDP want? Is that what Ontarians want?

It’s a question that could be aimed at the entire budget.

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